«Why don’t governments need trade unions anymore? The death of social pacts in Ireland and Italy Downloaded from at ...»

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The ideological objection cannot be entirely dismissed, however. Mario Monti has never favoured negotiation with unions. And the Ministry of Finance in Ireland consistently questioned social partnership as a way to solve policy problems. However, our argument about the power of unions to cause governments harm is one that extends to parties of the right as well as to the left. Berlusconi’s government tried to exclude unions in its 1994 pension reform and was defeated in the wake of this decision. In other words, there were politicians in the 1990s who did not favour working with unions for ideological reasons. But the high cost unions could impose on these governments made this an unpalatable option. In 2012, there was no similar cost that had to be paid, as a result of the weakening of the union movement in Ireland and Italy.

Page 20 of 23 P. D. Culpepper and A. Regan Social pacts in an earlier period were adopted primarily by countries that lacked the infrastructure of institutionalized negotiation characteristic of the northern European CMEs. Some analyses of social pacts have included agreements between the social partners in the Netherlands (Rhodes, 1998) or Finland (Avdagic, 2010). We do not expect our ﬁndings to hold in these cases, should they have economic troubles of the sort facing southern Europe and Ireland in the Euro crisis. Finland enjoys roughly 70% union density. In the Netherlands, the constitutionally entrenched power of works councils provides strong microDownloaded from http://ser.oxfordjournals.org/ at University College Dublin on September 19, 2014 foundations for the periodic macro-bargaining that emerges in the case of Dutch ´ social pacts (Hancke and Rhodes, 2005; Culpepper, 2011). Our argument is restricted in scope to the countries that do not enjoy such institutional arrangements. These are, of course, precisely the countries that seemed to beneﬁt so much from the reform capacities generated by social pacts 15 years ago, during the optimistic preparation for the EMU.

These theoretical claims about the role of unions in Ireland and Italy may have wider application, and call for further research; particularly, the question as to whether previous social pacts have themselves contributed to a decline in legitimacy. The Dutch and Finnish cases suggest this may not be the case. Despite the extensive use of social pacting in these countries, Finnish public distrust in unions was only 27% in 2010, and only 30% of people polled expressed distrust in Dutch unions. Social pacts do not necessarily cause public trust in unions to weaken, as the experience of these countries shows. Instead, it is probable that protracted and nakedly self-interested insider behaviour leads to the rise in public distrust.

Hence, it is likely the content of the deal that matters for future union legitimacy.

Union economic and political power—the ability to cripple production or to call mass demonstrations in a capital that shake the government—has always been part of the arsenal of labour negotiation. We have argued that this industrial and political strength, or what we have called the stick of union power, has the same sources as the more reform-friendly capacity to mobilize consent to solve government problems. Both are aspects of the underlying legitimacy of unions as representing a broad interest in society: the interest of those who sell their labour in the service of economic production. It is on the basis of this legitimacy that unions have claimed to be the privileged interlocutor of employers in the private sector and state representatives more broadly. When that legitimacy goes, both the sharpness of the stick and the sweetness of the carrot are degraded.

Our ﬁndings are speculative, based on what we have observed in two countries.

But the interaction between union legitimacy, an increasingly narrow membership, and elite and mass opinion seems to us a crucial and underexplored part of the debate about the political economy of contemporary capitalism today. Social pacts once appeared to provide a way for a broad societal input to be rallied behind stringent reform plans, even in countries without the institutions for Why don’t governments need trade unions anymore? Page 21 of 23 neocorporatist negotiation. The most recent episode of Eurozone reform has shown that the governments no longer feel that unions are worth the trouble of bringing into privileged negotiation. They can be treated as just one interest group among many.

References Antichi, M. and Pizzuti, R. (2000) ‘The Public Pension System in Italy’. In Reynaud, E. (ed) Downloaded from http://ser.oxfordjournals.org/ at University College Dublin on September 19, 2014 Social Dialogue and Pension Reform, Geneva, International Labour Ofﬁce, pp. 81 –96.

´ “Competitive Corporatism?”’. In Rhodes, M. and Meny, Y. (eds) The Future of European Downloaded from http://ser.oxfordjournals.org/ at University College Dublin on September 19, 2014 Welfare: A New Social Contract?, London, Macmillan, pp. 178–203.

Roche, W. K. (2013) ‘Austerity without Solidarity: Industrial Relations, Employment and Welfare in the Irish Crisis’, Paper Prepared for Conference on Varieties of Capitalism and Responses to the European Employment Crisis, University of Denver, Colorado, 1 –2 June 2012.

Simoni, M. (2010) ‘Labour and Welfare Reforms: The Short Life of Labour Unity’.

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